Bega Cheese pays $11m for Tasfoods' Betta Milk and Meander Valley

The deal, which is subject to various regulatory approvals, will see another large-scale Tassie-owned milk producer fall into mainland hands, with the Burnie milk plant and equipment and staff transferred to NSW-based Bega.

The deal, like the recent sale of the Shima Wasabi brand, is part of TasFoods' strategic review to shave off unprofitable businesses in an attempt to reach profitability for the first time.

Under the deal, TasFoods will retain the land and buildings of the Betta Milk site at Burnie, and will lease it back to Bega.

The sale deal closes a less than successful investment in milk for Tasfoods - the company bought Betta Milk in 2019 for $11.5 million - more than the amount it is now receiving for both brands.

It acquired Meander Valley Dairy from Robin and Karen Dournauf for $2.1 million in September 2015.

The sale deal announced on August 28 will also allow Bega to use the Pyengana Dairy brand for milk and cream products in Australia in perpetuity.

Tasfoods chief executive officer Scott Hadley said the sale funds would be used to retire all of TasFoods term debt and fund future growth opportunities.

"The sale of Betta Milk Dairy and Meander Valley Dairy businesses and the licensing of Pyengana Milk represents an important strategic step towards simplifying TasFoods and strengthening the company's balance sheet," he said.

The group embarked on a strategic review of its assets in March 2022, and soon after closed the short-lived organic poultry brand, Isle & Skye. In June, it sold its Shima Wasabi unit to a local Tasmanian company.

"Since the announcement of the new Strategic Focus in March 2022, the TasFoods' board and senior management team have continued to assess the divisions and asset base of the company through the lens of where our expertise and core capabilities can add value.

"The transaction allows us to sharpen our focus on delivering organic growth across Nichols Poultry and Pyengana Cheese, while continuing to identify and evaluate strategic and financially compelling opportunities in adjacent, high-growth food and beverage sectors to create sustainable value for our shareholders," Mr Hadley said.

It was "pleasing" that an iconic Australian dairy brand such as Bega Cheese had chosen to purchase the brands, Mr Hadley said.

"We are confident that the Betta Milk and Meander Valley Dairy business, its customers and employees will continue to thrive under the custodianship of an equally proud, Australian-owned group in Bega."

News of the deal came as TasFoods reported an 11.8 per cent increase in operating revenue for the first half of the 2021-22 financial year, to $38.2 million.

The net loss after tax was $3.8 million in the period - an improvement over the $5.4 million net loss delivered in the six months to December 2021.

Mr Hadley said the revenue performance was "particularly pleasing" in light of the market challenges the business has faced.

"We have observed consumers in the grocery channel preference affordable options over premium brands and to have delivered growth ... along with gross margin expansion within that environment highlights the value of TasFoods' brand portfolio."

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